HOW AGRIBUSINESS HAS HIJACKED THE USDA

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HOW AGRIBUSINESS HAS HIJACKED REGULATORY POLICYAT THE U.S. DEPARTMENT OF AGRICULTURE

This paper was conceived by the ORGANIZATION FOR COMPETITIVE MARKETS www.competitivemarkets.com It was commissioned by a working group of the AGRIBUSINESS ACCOUNTABILITY INITIATIVE www.agribusinessaccountability.org

Each working group member had responsibilities for different case studies.The organizations listed do not necessarily endorse every detail of every case study. However, all collaborating organizations subscribe to the thesis that “revolving door” industry appointments at USDA constitute a problem that must be addressed.

The following working group members helped research and edit the paper: SCOTTY JOHNSON, Defenders of Wildlife www.defenders.org BEN LILLISTON, Institute for Agriculture andTrade Policy www.iatp.org PATTY LOVERA, Public Citizen www.citizen.org LARRY MITCHELL, American Corn Growers Association www.acga.org PETER O'DRISCOLL, Center of Concern www.coc.org MARK SMITH, Farm Aid www.farmaid.org FRED STOKES, Organization for Competitive Markets www.competitivemarkets.com The Agribusiness Accountability Initiative thanks the working group members and THE JESSIE SMITH NOYES FOUNDATION for their financial support to this project.

IN ITS EARLY DAYS, the United States Department of Agriculture (USDA) was dubbed the “People’s Department” by President Lincoln, in recognition of its role in helping the large portion of the population that worked the land. Some 140 years later, USDA has been trans- formed into something very different. Today it is, in effect, the “Agribusiness Industry’s Department,” since its policies on issues such as food safety and fair market competition have been shaped to serve the interests of the giant corporations that now dominate food production, processing and distribution. We call it USDA Inc.

The reorientation of USDA has been occurring over many years, but it has now reached a dramatic stage. Thanks to its growing political influence within the Bush Administration, Big Agribusiness has been able to pack USDA with appointees who have a background of working, lobbying, or performing research for large food processing companies and trade associations. Conversely, there are virtually no high-level appointees at USDA with ties to family farm, labor, consumer or environmental advocacy groups.

The extent to which agribusiness has packed USDA with its people is apparent when looking at the biographies of the top officials of the Department, up to and including Secretary Ann Veneman.

In addition to her time as a public official, Veneman served on the board of biotech company Calgene (later taken over by Monsanto). Many of Veneman’s key aides and the heads of various USDA agencies are political appointees who spent much of their career working for agribusiness companies and trade associations.

For example, Veneman’s chief of staff Dale Moore was executive director for legislative affairs of the National Cattlemen’s Beef Association (NCBA), a trade association heavily supported by and aligned with the interests of the big meatpacking companies, such as Tyson and Cargill. Deputy Secretary James Moseley was a co-owner of a large factory farm in Indiana. Floyd Gaibler, a Deputy Under Secretary, used to be executive director of the dairy industry’s National Cheese Institute.

Assistant Secretary for Congressional Relations Mary Waters was a senior director and legislative counsel for ConAgra Foods, one of the country’s largest food processors.

These industry-linked appointees have helped to implement policies that undermine the regulatory mission of USDA in favor of the bottom-line interests of a few economically powerful companies. This paper documents USDA’s abandonment of its public mission from two perspectives. Through five case studies, it both reviews the questionable policies the Department has adopted in key areas and the background of the key officials who helped to determine those policies.

The assumption that the United States was immune to this livestock affliction, popularly known as “mad cow disease,” came to an end last year, when the first confirmed domestic case was found in a cow originating in Canada. Since that time, USDA has resisted imposing the strict safety measures and testing procedures recommended by most independent experts. At the same time, the Department has blocked an effort by a Kansas-based meatpacker called Creekstone Farms to install its own BSE testing lab, claiming that comprehensive testing by the company might lead consumers to think that meat from other providers was not safe. The USDA Inspector General is now investigating the actions of agency officials who secretly allowed beef imports from Canada to resume shortly after a BSE outbreak in that country-while at the same time opposing country-of-origin labeling of meat.

These reckless policies are best explained by the fact that numerous key positions in the Department are held by former staffers at NCBA, which, along with the dominant meatpacking firms, has also opposed stricter safety and testing measures as well as country-of-origin labeling.

The handful of giant corporations that dominate meatpacking in the United States have used their economic muscle to deny livestock producers (ranchers) access to open markets and have forced them to enter into private contracts heavily weighted in favor of the packers. This one-sided arrangement is known as captive supply. Under legislation enacted in the 1920s, USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) is supposed to oversee livestock markets and guard against anti-competitive practices.

Instead, GIPSA has repeatedly downplayed the problem of captive supply and has all but abandoned its enforcement of fair competition rules. This “see no evil” approach has apparently been embraced by the current Administrator of GIPSA, Donna Reifschneider, who previously served as president of the National Pork Producers Council, a trade group closely aligned with dominant meatpacker interests.

Americans used to think that tainted meat was a problem that disappeared with the reforms of the Progressive Era in the early 20th Century. Recent years have seen a resurgence of E.coli bacteria, listeria and other hazards that are widely linked to a weakening of traditional slaughterhouse inspection practices. Bowing to the wishes of the major meatpackers, USDA has endorsed a system called Hazard Analysis and Critical Control Point (HACCP). But instead of using HACCP to supplement traditional inspection, USDA implemented a watered-down version of the system while at the same time allowing meatpackers to rely more heavily on questionable procedures such as irradiation to deal with contamination. The federal official most directly responsible for meat inspection policies is Dr. Elsa Murano, Under Secretary of Agriculture for Food Safety. Before joining the Bush Administration, Murano was an academic who strongly supported irradiation and who did research funded by Titan Corporation, a leading player in food irradiation through its creation of SureBeam Corporation.

Resistance to genetically modified (GM) wheat among farmers has become so strong that Monsanto Co. announced recently that it was abandoning active efforts to develop GM wheat. USDA, nonetheless, remains one of the strongest proponents of agricultural biotechnology. Like her predecessor Dan Glickman, Secretary Veneman has promoted GM foods in

5 “The Department has been deliberately transformed from a servant of the public interest into a vehicle for promoting the narrow interests of large producers and major food processing and input corporations, i.e. Big Agribusiness.”

international forums, downplaying the safety issues and charging that biotech critics are impeding efforts to reduce world hunger. As noted previously, Veneman once served on the board of a biotech company. Neil Hoffman, the Biotechnology Regulatory Services Director of USDA’s Animal and Plant Health Inspection Service, formerly worked for the biotech firm Paradigm Genetics. Nancy Bryson, USDA’s general counsel, was formerly a partner in the law firm of Crowell & Moring, where she co-chaired the firm’s corporate biotechnology practice.

These overgrown livestock facilities, which house and feed 1,000 or more animals in a confined area, are among the biggest contributors to agricultural pollution. Also known as factory farms, CAFOs produce enormous quantities of manure that contaminate water supplies and cause other environmental problems.

USDA has promoted the growth of CAFOs with little or no regard to their public health consequences. Specifically, USDA has supported the misguided policy of using conservation dollars out of its Environmental Quality Incentives Program to subsidize CAFOs’ attempts to solve their manure problems. The official who oversees the day-to-day activities of USDA, Deputy Secretary James R. Moseley, has been described by the Chicago Tribune as “a champion of industrial-style hog production.” Before taking office, he was a partner in Infinity Pork LLC, an Indiana CAFO that raised 50,000 hogs annually.

Each of these case studies demonstrates an alarming correlation between controversial policies adopted by USDA and the financial interests of the companies and trade associations that previously employed many key Department officials. Rapidly disappearing from USDA is a diversity of perspectives, particularly those that give priority to family farmers and consumers. There is no longer any balance between USDA’s traditional dual roles of promoting the agriculture industry and protecting food safety and the livelihood of family farmers. USDA Inc. now appears to slavishly follow the wishes of Big Agribusiness.

This paper concludes that until there is greater stakeholder representation inside USDA, a substantive movement toward more balanced farm and trade polices is impossible. Excessive industry influence is the central obstacle to redirecting U.S. agriculture in a more sustainable and fair direction. The paper thus calls for broad collaboration on an alternative agenda for addressing the problems at USDA, including:

- Reappraisal of ethics rules to prevent government officials from overseeing policies that directly affect the interest of their former employers;

- Evaluation of whether USDA can continue to serve both as a promoter of U.S. agricultural products and a regulator of food safety; and

Progress on these measures will begin to turn USDA Inc. back into an arm of government that represents the public interest.

INTRODUCTION “WE PROVIDE LEADERSHIP on food, agriculture, natural resources, and related issues based on sound public policy, the best available science, and efficient management.”

This is the official mission statement of the United States Department of Agriculture (USDA), one of the largest entities of the federal government, with an annual budget of more than $70 billion and a workforce of more than 100,000.

Despite this noble statement of public purpose, there is ample reason to question whether USDA’s vast resources and expertise are serving the best interests of consumers, farmers and the environment-or the narrow interests of large agri-food corporations that wield enormous economic power and political influence. This paper explores the extent to which the food industry has shaped USDA decision-making over the past decade. It suggests that increasing market concentration in the food system may well be exacerbating industry influence at USDA. The result of ongoing mergers and acquisitions is that there are fewer and larger companies that face less competition in advancing their policy prescrip- tions. To shed more light on these issues, the paper briefly reviews the mission and history of USDA, as well as the rise of the food industry oligopoly. It then explores in more detail a series of issues in which positions adopted by USDA are much more closely aligned with the interests of industry than those of consumers, small farmers and the environment.

In each of the cases studied, high-level political appointees at USDA have had strong ties to companies and industry sectors with much at stake in the Department’s policies. The paper therefore concludes that a great deal more attention must be paid to conflicts of interest in the formulation of food and agriculture policy, and that there is a need for greater balance in access to key decisionmakers to ensure that the public interest is not always trumped by food industry insiders.

USDA is a vast bureaucracy with a wide range of responsibilities in its portfolio. For example, it:

- carries out anti-hunger efforts such as the food stamp and school lunch programs;

USDA is also a regulatory agency. It is responsible for protecting the nation’s food supply from contamination and animal or plant diseases and infestations. Meat inspectors employed by the USDA’s Food Safety & Inspection Service are stationed directly alongside production lines in packinghouses. The Department is also responsible for enforcing certain antitrust-like laws in order to ensure fair market competition and the viability of smaller agricultural producers.

This paper is concerned only with the food-related regulatory functions of USDA, and our conclusion is that the Department has been an increasing disappointment. The U.S. food supply, once considered the envy of the world, is plagued by outbreaks of E.coli, salmonella and listeria that many observers attribute to the spread of factory farming and production speed-ups by the big food processors. USDA has been widely criticized for its handling of the recent appearance of so-called mad cow disease in domestic livestock. The Department (along with the Food and Drug Administration) has also been called to task for promoting agricultural biotechnology without adequately assessing the economic and environmental impacts on farmers or the public health consequences for consumers.

In addition to performing poorly in the food safety arena, USDA has fallen short in its responsibili- ty to protect family farmers from the effects of economic concentration. Particularly in the meat sector, the Department has stood by while small producers have been squeezed by the handful of giant corporations that have taken control of beef, pork and poultry processing.

The regulatory failures of USDA cannot be attributed simply to bureaucratic inertia. There is growing evidence, documented in part in this paper, that the Department has been deliberately transformed from a servant of the public interest into a vehicle for promoting the narrow interests of large producers and major food processing and input (seed, fertilizer, etc.) corporations, i.e. Big Agribusiness. This transformation has been carried out not only by a shift in policy orientation but also by a change in the composition of the Department itself. Many of the top positions in USDA are now held by individuals who previously worked for Big Agribusiness.

This special interest takeover, which parallels developments in other branches of the federal government, poses a serious threat to the safety of the U.S. food supply and the viability of family farms.

We have produced this report to highlight this alarming development and to offer recommendations for reorienting the agricultural regulatory system to the needs of the country as a whole, not just the most powerful corporate players.

The bill creating USDA was signed into law on May 15, 1862 by President Abraham Lincoln, who later referred to the agency as “the people’s department,” given that the group it was designed to serve—farmers and their families—made up roughly 50 percent of the population at the time.

USDA’s original mission focused on providing information to farmers to improve agricultural production.

The phrase took on added significance in the 1880s, when USDA began to protect the well-being of the population as a whole by researching the problem of food adulteration. During the same period, Congress gave USDA responsibility for overseeing the transportation and importation of live stock-a significant expansion of the Department’s role into the then-embryonic field of government regulation.

USDA’s Bureau of Animal Industry was also given responsibility for implementing the first federal meat inspection act, passed by Congress in 1890.

That role was expanded when the law was strengthened in 1906 after the uproar caused by the publication of Upton Sinclair’s muckraking book The Jungle. That same year, Congress passed the Food and Drugs Act, largely as a result of research on food safety that had been conducted by USDA’s Bureau of Chemistry (a precursor of the Food and Drug Administration). The Bureau was so zealous in its research that it had assembled a group of volunteers within USDA who consumed meals containing potentially harmful substances to determine the health effects. The press dubbed these human guinea pigs the Poison Squad.

In the 1920s the Department was given additional regulato ry functions as part of an effort by Congress to control the effects of concentration of ownership in meatpacking with the passage of the 1921 Packers and Stockyards Act. Later regulatory duties included enforcement of the 1957 Poultry Products Inspection Act and the 1968 Perishable Agricultural Commodities Act.

Today, USDA is a very different entity from the one lauded by Lincoln. It is instead an agency that seems determined to weaken or dismantle much of the regulatory framework that has been developed over the past century.

In areas such as nutrition advice (the food guide pyramid), analysts such as Prof. Marion Nestle of New York University have shown that the Department has ignored scientific evidence in favor of placating industry interests.

As described in the case studies below, USDA takes decisive action in favor of public health only when forced to by a public scandal, and even then it seeks ways to protect the interests of large producers and major processing companies.

The idea that a regulatory agency would abandon its public mission in favor of a narrow one is not a new concept. In fact, it is a common view of analysts on the left and on the right. The left critique of regulation originates with the work of historian Gabriel Kolko, whose 1963 book The Triumph of Conservatism argues that the regulatory reforms of the Progressive Era were really a response to demands by big business that the federal government rationalize ruinous competition.

George Stigler, a leading figure in the conservative Chicago School of Economics, wrote a widely cited 1971 article in which he argues that industries seek regulation in order to control entry into the field and otherwise restrict competition.

Critiques such as these have made the principle of “regulatory capture” a standard element of contemporary economics.

“Thanks to its political influence, Big Agribusiness has been able to pack USDA with appointees who have a background of working in the industry, lobbying for it, or performing research or other functions on its behalf.

These appointees have helped to implement policies that undermine the regulatory mission of USDA in favor of the bottom-line interests of agribusiness.”

What has happened in USDA goes beyond a process of capture intended to restrict competition.

Thanks to its political influence, Big Agribusiness has been able to pack USDA with appointees who have a background of working in the industry, lobbying for it, or performing research or other functions on its behalf.

These appointees have helped to implement policies that undermine the regulatory mission of USDA in favor of the bottom-line interests of agribusiness. In other words, public health and livelihoods are at stake.

To see that agribusiness has packed USDA with its apparent representatives, one has only to look at the biographies on the Department’s website of its roughly 45 top officials, including the Secretary, Deputy Secretary, Under Secretaries, Assistant Secretaries, Deputy Under Secretaries, Deputy Assistant Secretaries and heads of key offices. Many of the biographies cite previous work with agribusiness companies and their trade associations, lobbying firms and research arms, including university research centers bankrolled by the food industry.

Additional research makes clear that there are approximately as many industry people among the appointees as there are career civil servants.

Here are some examples of appointees with past industry ties (unless otherwise noted, the source for each affiliation is the individual’s biography on the USDA website):

- Secretary Veneman’s chief of staff DALE MOORE was executive director for legislative affairs of the National Cattlemen’s Beef Association (NCBA), a trade association heavily supported by and aligned with the interests of the big meatpacking companies.

- Veneman’s recently named Deputy Chief of Staff, MICHAEL TORREY, was a vice president at the International Dairy Foods Association.

- Director of Communications ALISA HARRISON was formerly executive director of public relations at NCBA.

- Deputy Secretary JAMES MOSELEY was a partner in Infinity Pork LLC, a factory farm in Indiana.

- Under Secretary J.B. PENN was an executive of Sparks Companies, an agribusiness consulting firm.

- Under Secretary ELSA A. MURANO conducted industry-sponsored research while a university professor (see below).

- Under Secretary JOSEPH JEN was director of research at Campbell Soup Company’s Campbell Institute of Research and Technology.

- Deputy Under Secretary FLOYD D. GAIBLER was executive director of the National Cheese Institute and the American Butter Institute, which are funded by the dairy industry.

- Deputy Under Secretary KATE COLER was director of government relations for the Food Marketing Institute.

- Assistant Secretary for Congressional Relations MARY WATERS was a senior director and legislative counsel for ConAgra Foods.

Industry infiltration also extends to USDA’s non-food areas. For example, Mark E. Rey, the Under Secretary for Natural Resources and the Environment, who oversees the Forest Service, was previously a vice president of the American Forest and Paper Association.

By contrast, there are virtually no associations with family farm, consumer or environmental groups to be found among the appointees. The allies of Big Agribusiness have a tight lock on the main food policy arm of the federal government.

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Please... this statement makes broad brush claims that are not supported with any accompanying facts. I know folks who run CAFOs - some are not well run, others are very well run and are good stewards of natural resources.

If these folks want to make claims, at least they should back it up with some fact...

I'd prefer they get rid of the USDA altogether, along with HUD, BATF, EPA, Dept of Ed., Civil Rights Commision, PBS, FEMA, and about 40 other federal institutions.

The jackasses that run the USDA all come from mega farms and want to drive the family farm/ranch out of business so they can acquire the land at fire sale prices and get big government into the rural parts of the USA

Hows that

--Gabriel Kolko, whose 1963 book The Triumph of Conservatism--

--this is a great book.

Incidentally."Business" usage of the power of the government gun to control markets is not new and was warned against by Adam Smith in his famous comment on what shopkeepers do when they get together--

11 posted on 03/28/2006 8:56:33 AM PST by rellimpank (Don't believe anything about firearms or explosives stated by the mass media---NRABenefactor)

Your posts are too well thought out and have supporting documentation, most would rather chant GO BUSH GO REPUBLICAN than wake up and realize that we are on the eve of civil war and a new dark age

13 posted on 03/28/2006 8:57:59 AM PST by rellimpank (Don't believe anything about firearms or explosives stated by the mass media---NRABenefactor)

That's about right. The mechanism through which this will be accomplished includes:

NAIS
Open Borders
The Death Tax

Thanks VRW. Hopefully, with all our groups watching what is going on now, it will no longer be 'business as usual'.

Sort of. It is a caricature. Oil painting my friend did. This one too.

I took digitals of the paintings for emoticons.

So true...

Don't worry, though, the brigadiers will be along shortly with posts reflecting their immense intellectual prowess, which usually amounts to people hurling third grade level insults or sneering at you the way you would expect an urbanite liberal to do.

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